Private universities

The law and the profits

Private competition is looming in a lucrative business for universities

BRITISH universities like students who pay big fees. They are less happy to deliver the corresponding service. The hefty fees paid by foreign and postgraduate students are siphoned off to subsidise research and the unprofitable teaching of British undergraduates.

That creates a gap, and into it is marching a private company, BPP, which is already the country's largest provider of professional training. BPP already looks a bit like a private university: it teaches some 20,000 students in 32 centres in Britain, in subjects such as accounting and law.

But other bits aren't like a British university at all: there's no sign of state planning; the staff are better paid, the buildings smarter, technology swisher, morale higher. Administration is leanly businesslike; there's no money spent on research—just a lot of high-quality teaching.

“They have a much more focused view in producing something that their client is after. Universities are not responding to customer demand in the same way,” says a senior partner at one of the five big British law firms that is contracting its training exclusively to BPP from 2006.

Until recently, BPP did not award degrees: that is the privilege of officially recognised universities. Now things are changing, chiefly in the booming business of legal training. From September, it will be offering a postgraduate law degree, including the courses needed to become a solicitor. It won't, technically, be a degree from BPP: the firm is renting that right for an undisclosed sum from the University of Central Lancashire, which is “validating” the course.

That's an odd deal. To get round regulation, the stronger party seeks endorsement from the weaker one. The Lancastrian courses, at £3,000, are only a third the price of the BPP ones. Whereas BPP's law teaching is one of only five outfits rated “excellent” by the Law Society, the solicitor's self-regulating body, Lancashire's is in the average category of “very good” (anything less than “good” is disastrous).

Carl Lygo, chief executive of the BPP law school, says that these hybrid products, combining an academic and a professional qualification, are the fastest-growing bit of the company's business. In 2008, once new rules governing teaching-only universities are in place, he expects BPP to apply for university status. In the meantime, active discussions with other impoverished vice-chancellors are under way. “If the market's there, we'll teach it, so long as it's white-collar,” he says.

So what happens now? In America, for-profit universities such as Phoenix have already made inroads into the higher-education business. So one might think that British universities might be a bit worried, as an aggressive competitor chomps up their customers. Not so: the vice-chancellor of one London university whose postgraduate law courses are seen as a prime competitive target by BPP has never heard of the company. A senior manager at another law school was shocked to hear that BPP charged more than its competitors, and paid its staff better. “We take a holistic approach,” he says, brushing aside the idea that BPP might be taking the best staff and most ambitious students.

Other established outfits are savvier. The College of Law, the country's biggest law school, has a tight customer focus too. It has persuaded the Law Society to approve tailor-made courses for the three big law firms that it serves exclusively. BPP says if the idea works, it will copy it. But a lawyer who has studied at both outfits says BPP is better: “They know that the main thing is to get you through the exams,” she says. “The other places tell you all this stuff you don't need to know.”